Economists suggest dumping DTV plans

By SCOTT R. BURNELL, UPI Telecommunications Writer  |  Oct. 26, 2001 at 6:17 PM
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WASHINGTON, Oct. 26 (UPI) -- Economists say the troubled government-mandated transition to digital television Friday should be scrapped in favor of free over-the-air broadcasts through cable and satellite services.

In 1997, the Federal Communications Commission studied the differences between analog broadcast technology and DTV, which transmits video signals in much the same way as the Internet moves data.

The commission decided DTV's more efficient use of the airwaves, as well as its sharper picture and enhanced services, would be best for the general public. In 1998, the FCC started U.S. broadcasters on a mandated transition to the new technology, with completion targeted for Dec. 31, 2006.

The transition faces many of the same challenges that slowed the adoption of FM radio, said Stanley Besen, an economist with Charles River Associates, a consulting firm in Boston. Chief among these roadblocks, he said, is how DTV broadcasts face a very entrenched analog system whose quality is entirely adequate for the vast majority of U.S. television viewers. Makers of DTV receivers will have to closely coordinate their efforts with broadcasters to overcome this, Besen said.

Thomas Hazlett, an economist and staff member at the Washington-based American Enterprise Institute, which hosted the discussion, said the transition has misfired so far. Only 150,000 DTV receivers have been sold, he said, and less than 20 percent of the nation's 1,600 TV stations have started DTV broadcasts, so the country is very unlikely to meet the 2006 deadline.

The solution, Hazlett said, lies in the fact that digital cable and satellite TV services have already reached most U.S. households. As long as the government is willing to spend the money to provide such services to low-income and other disadvantaged households, the existing over-the-air system of broadcasting can disappear entirely, he said.

Transferring DTV signals to cable and satellite systems would also free up a very large chunk of the radio spectrum, he said. The approximately 400 MHz currently devoted to television could be reallocated to advanced cell phone technologies, high-speed wireless Internet access and other services, he said, with the license auctions generating much-needed revenue for the government.

"If you allow the market to sort this out, I think you could get a very nice mix of services in that (frequency) band, that in fact could include the possibility of over-the-air TV," Hazlett said.

Representatives from broadcast and cable companies disagreed, however, saying too much money has already been invested on DTV to back out now.

Edward Fritts, chief executive officer of the National Association of Broadcasters, said more than 700 TV stations will have DTV broadcasts by next year.

Fritts also pointed to a recent study showing 55 percent of Americans understand what DTV is and what it can do. More than 40 percent of those surveyed are at least considering purchasing a DTV receiver in the next couple of years, he said.

Robert Sachs, CEO of the National Cable and Telecommunications Association, said cable franchises are not currently required to carry DTV signals, but have spent about $1,000 per customer to upgrade systems in case they must do so in the future.

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